the sector of the day, financials and check out the major european banks all lower as you would expect after news of the cypress bailout. banks, deposits come here, who knows? but at least as far as today headed lower. i want to thank our guest ben pace. thank you, ben. make sure you join us tomorrow. "squawk on the street" begins right now. good monday morning. welcome to "squawk on the street." i'm melissaly with jim kramer and brian sullivan. we are live at the new york stock exchange carl kibt niia and david faber have the week off. the nation of cypress adding pressure to markets around the globe. we are certainly off of our lows of the morning, but the dow right now is looking to open with a loss of 78 points and the s&p 500 is looking to open lower by 13 points and again off of

lows of the morning and take a look at what's going on in you're. we saw europe weakening to its lowest level year to date. the lowest since december 10th and we saw yields falling to a negative percentage yield and we do see italy down by 1.2%. overnight in asia we did see huge losses there and j.p. morgan cutting china to an underweight and we did see pressure shanghai which finished the day lower by 1. 7%. this is the biggest loss in ten months and. let's get more on the cypress controversy. michelle caruso-cabrera with the latest on this developing story. >> instead of the tradition route of severe austerity across the country with much higher taxes and pay cuts, instead what they did was they taxed bank deposits. they're calling it a tax. a lot of folks are calling it a

seizure. here's what's significant. even small depositors below the insurance threshold are going to get hit. the original number for small depositors below 100,000 euros was 6.5%. they're working in parliament right now about shifting that and any other subsequent plan suggests that if you have insured money it will still get hit. what did we see over the week whend this announcement happened on yesterday? runs on the atms at the banks in cypress because they'd shut down the banks as a result of this. they stopped all wire transfers and you also if you tried to take money out they had partitioned out the amount of money that you were supposed to be giveing to the government each though there hasn't been a vote in parliament. why did cypress need a bailout? its banks are bust. the reason the banks in sicypru

they bet the greek debt would not be restructured but it was. that's left a lot of them insolvent. the banks in cyprus are huge, eight times the size of the economy. consider that here in the united states. our banking system is roughly one-time the size of our economy. what we're waiting to see next are they going to get this through parliament and get it done? it is so controversial they're trying to find out different ways to make it less controversial. impose the tax on larger shareholders to a much greater degree. it was originally 9.9% and you go to 12%. if you didn't want to tax the small guys at all you'd have to go to 15% or 16%. this is the scene when the president walked into the palace headquarters. there were people there with no written on their hand and this says merkel stole our money. keep in mind, european union will still give them 10 billion euros and they were trying to come up to reduce the original

size from 17 billion euros. the other thing to keep in mind, by taxing depositors they're taxing a lot of foreigners and a lot of russians who had kept their money. the thing is will the rest of europe, will small depositors across the rest of europe look back and say, wow, if they can tax my deposits is my money safe each though they claim it's insured? it's the ripple effect that is really quite feared here. guys, back to you. >> michelle, what the markets are telling us at least in europe is maybe there's more of a concern in italy where there is not a stable government right now. >> right. >> is that what your report is indicating that the fear is centered around these countries like italy and spain which might be a little bit more weak? >> yeah. absolutely. we see that in the yields rising there as well. those who say it's not going to cause contagion say, look, cyprus is unique. it's eight times the banking

system. eight times the side of the economy. if you look at the size of the bailout needed it is unprecedented. eig italy and spain don't even come close to the bank bailout. we used to think spain might need a bailout of 10% of gdp for its banks. can you imagine, that's huge. in cyprus is we're talking 60% of gdp so it's outsized. >> michelle caruso-cabrera, thanks so much for that. 60% of it relies on its banking system and 30% of its deposits are from non-uri on countries. >> it is roughly two-thirds of exxon mobil's capital spending. >> there are people who have missed this move, people who missed it for 6,000 point, 3,000 points and they will point out that is irrelevant, the size of the gdp and this is the next big thing and people will tell you you ought to take your money out of j.p. morgan chase. these are people who have a

terrific motive. they have got to catch up with the averages. at the same time, stocks are pretty extended so it's a great excuse. i was going use the fed as a great excuse, but now we have cyprus. i'm not being facetious. at home you're getting email all weekend. what do the emails say? this is armageddon. this is doomsday. the sun came up and i was shocked and it was dark at 6:30. i was thinking maybe the sun did not come up today. let's take a deep breath and let's understand that i'm more concerned about cypress semiconductor than i am cyprus, because three weeks ago we'll be talking about cypress semi. >> the markets do have a great cyprus hill to climb over. i've been waiting to use that. if you believe this will happen in germany, if you believe this will happen in switzerland, if you believe this may happen in the u.s. it may be armageddon. happening in cyprus is a fear level, but itself is not an

exogenous event. i don't see them going 400. >> i didn't want that last 1%, 2%. we have to repeal that because the market has been so overextended. it is a great excuse to be able to say, you know what? now you'll be worried about your return of capital instead of your return on capital and i'm sure people will say wow, this is a new way to hantel things and it's frightening for people who put $500 in the bank. >> the contrast of what they were saying tonight into this morning is night and day. goldman sachs saying it is unlikely to unravel depositors at this point. the financial market contagion, and j.p. morgan saying the big question is whether or not it will hit other countries and whether or not it will hit corporate depositors. there may be a run on the bank in investors, and will they need

to move the money. at the end of the day, they say it is probably unlikely. >> as i tweeted out last night, jim, do you believe this can ultimately be positive for the j.p. morgans of the ford. if you fear cyprus, why where will you go? geneva, london or new york? >> it went to 38 last week. i thought it should be at 36. banco santander. those are the natural runs and we always hear about that, look, you can craft any negative scenario you want. last may, we thought the spanish banks would go under, okay? i was speaking to you during the break. what was the single best investment after last may? what was the single best thing to buy? banco santander, but we forget that and we decide they're just a bunch of jockers again. let's start all over. francisco is still there. >> this will be a great test of

the bull market run, won't it be, jim? you have the markets open and trading for the rest of the day. whether or not we bounce and whether or not the buyers will step into the weak, u.s. financial which is at pre-market trade are indicating more than 1% lower across the board. >> how can they be so aggressive. these things were up so huge last week and you buy them now and bernanke sneezes and you have the negative people who want this market down so badly and we have contagion here and we have the flu. >> i'm glad you mentioned ben bernanke because it is a big week, right? cypress dominating the morning. >> we have housing data today. housing data tomorrow and the fed. "street signs" is now the fed show because everything is coming out at 2:00 or 2:30. like kernen does it. >> oh? chlt. >> did you find yourself not focusing on the brackets?

i have greece over cyprus in the second round and mallorca. >> how about gonzaga over cyprus. i don't want to make too much light of it, it's just that when you come in after a weekend where you just believe that the futures will be down 28 because a lot of people tell you they'll be down 28 you don't want to be lulled into thinking this isn't as bad as i thought because then that will bring out sellers who take a look at stocks leak the insurers which were up so much. kimberly downgraded today. i think kimberly is a sell. i've been saying to consumer stocks. they're 19 times earnings and they grow very small amounts. >> is toilet paper worth that sort of valuation? >> no, i don't think so. maybe two-ply. >> if you're out there. >> possibly! >> if you're out in america and you went with your husband and wife to view a home and you're ready to make a bid to buy a home, finally after sitting on your hands for a few years, did you weake up today and say hone, we're not going put a bid on the

house because the cypress bank tax has been levied. >> they don't know it's russian mafia money. they don't know if it's hot money and they don't know if the money has been down 60% and if they're going to tax that they could tax spain. i agree with you, but then again, i saw a line to get into an open house in brooklyn. >> really? >> yeah. a line, there are not enough places to move into, and i see libraries being raised in new york in order to build high-rises because there's a shortage of real estate. >> so, no, i don't think anyone will hold back, but i do believe that it's reasonable to think that we could have a 2% pullback. we've been straight up. >> this is a pullback that everybody has been waiting for. >> this has been an infuhr rating rally because they weren't in from the beginning and they feel that they missed the boat. they keep hearing about these strategies and it will happen in may, seasonal, blah, blah, blah. finally, maybe it's here and maybe this provides the next leg

of the market. >> there's a lot of underperforming managers. >> and they're the one who need their two and 20. they're underperforming the market and they'll pile on in one direction and they're the ones who tell me that cypress is the beginning of thermonuclear banking. >> they're all sort the s&p. >> if i were a hedge fund manage, i would not cover the initial floor because you have to deal with wednesday and i'm more concerned about wednesday because what happens if bernanke decides, i read the goldman sachs piece this morning and they are raising the s&p that -- they're raising the estimates and maybe the economy is getting stronger and i don't want to be the -- this is what you fear. this is what you fear if you're a fund manager and you say i got through cyprus and now i have to deal with the fed. >> it's not a great week. how about that? >> it's not a great week. maybe an exciting week, but not a great week. >> will ben bernanke address

cyprus on wednesday? i mean, we have events throughout that can switch directions in this market very quickly. >> like china. china goes down pretty much every day. that's kind of important. >> when j.p. morgan cuts it to an underweight, that's pretty major. >> it's disturbing given the fwakt that -- i went through the charts. these are the charts and you obviously can't see because the cram doesn't catch these things. these are the number of charts that i found were parabolic in nature, parabolic meaning they went straight up like a really bad roller coaster, that's a lot of them. have you ever been to magic mountain? these are all magic mountain names. they all went like this. csx, best buy, recommended again. celgene, textron, colgate, general mills, google, kellogg, kimberly, mccormick spice. they missed the quarter. mcdonald's, pepsi, proctor, discover, delta, cree, cracker

barrel! the prosecution rests. cracker barrel. >> cbrl, by the way. >> have you had the cheese they put on the pie. over 9,000 calories. >> and 600 flavors of hard licorice. >> how many stocks are above the 50-day moving average? >> it's hideous. >> if you say what's overbought? >> almost everything will be overbought. this is a nice, convenient, technical excuse to sell. >> that's what i agree with and the -- >> you have horse sense. >> no, i just read your email over your shoulder. >> oh, okay. >> terribly honest and professional. >> there are, believe it or not, america, some other stories that we are looking that the morning, hard to believe, but true. transocean urging shareholders to inject carl icahn's firm to increase three new members to the company's board. elsewhere, morgan stanley upgrading hewlett-packard. yes, hp getting an upgrade from

morgan stanley from an overweight to an equal weight and they cite positive momentum in free cash flow and in earnings and another wall street call for best buy. is the return of the zombies this morning. j.p. morgan resuming coverage of the electronics retailer at overweight and slapping a fat $29 price target on best buy. >> isn't that sweet? thank you very much. >> the upgrade, best buy with a $29 price target? >> big decliners at 2012 revenge. >> penguins. >> is there a best buy in cyprus? wouldn't that be interesting if they had a store in cyprus? wouldn't that be a combination of ironies and greenspan shopping there. >> it's right next to the bank of like. >> we'll keep following the banking details out of cyprus and we are setting up for a lower open. also, a record order not for boeing, for airbus from one of boeing's formerly top customers. also ahead, the latest read on

the housing market comes in in less than an hour and we'll talk about it with this guy. ceo of meritage homes and are people canceling contracts because of cyprus? i will ask him that directly. s&p, dow and nasdaq all indicating a lower open. bank fear, concern about what the eu may do to you, hide your kid, hide your wives, hide your husbands because they're taxing everybody up in here! we're "squawk on the street." you know how to dance... with a deadline. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. this is awesome. [ male announcer ] yes, it is, business pro. yes, it is. go national. go like a pro.

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. take a look at how we are setting off on the futures and while we are off the futures sessions lows. we should note this is one of the big of the down days we have so far this year. the dow will open lower by the 6 points and the s&p by 26 points and the vote on whether or not to tax deposits in cyprus has been put off until tomorrow after a public holiday today. we're still watching this and of course, it is weighing on our markets here. after hitting a new 52-week high on friday, shares of boeing are moving lower in the pre-market. this after indonesia's lion air, traditionally a big boeing client struck a deal with airbus to buy 234 jets in a deal totaling $24 billion. guys, that's why i said formerly one of boeing's best customers. when they buy 234 jets from your competitor, you're no longer considered a big customer.

>> that's a big loss for boeing. >> in the last ten days the stock has gone from 76 to 86 presuming every order will go to them and the 787 will fly and the defense sequester will not hurt them. this stock has been a teflon stock. this is a stock that i would not buy and i would sell right here. >> you don't think based on your charts because i know you have this fancy chart there. >> saturday morning. it's what i do. >> that's great. i'm jealous, but if you take a five-year look at boeing, on friday they closed -- closed at five-year highs. some are saying that this is a breakout. rbc raising the price to $10 a share to $94. it's returning. >> can i just say that that stock needs a serious breather? you know what? breathers aren't so bad. these are just, the day when is used to do a lot of charting and i just feel that when i saw boeing's chart i said listen, this one is just right for fall.

we get indonesia and we need to see a ryan air with 230 planes ordered right now. >> i was glad to see friday because i pointed out we had the ten-day record going, whatever it was, the only time the dow had risen 14 days in a row was in 1987 so maybe a little bit of a pullback. >> that was a bad year, man. good vintage, bad year. >> it is profit making time and cramer has a game plan for you. his mad dash is coming up next and we'll count you down to the opening bell. we have much more "squawk on the street" live from the nyse straight ahead. thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history.

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♪ ♪ ♪ in order to keep on try until we reach higher ground and we are a few moments before the first opening day of the week. there are individual names throughout and let's goat jim kramer and his "mad dash" out of the market open. >> the idea that verizon could do a big deal. verizon popped big last week. people are excited about the idea that maybe they'll buy out vodafone for the verizon wireless stake which you and i both know is a jigigantic piecef real estate. buy verizon and vodafone. they're saying this is going to happen and i talked about that with faber last week and we're talking a $100 billion deal and it's a wake-up call in the same way cyprus is a wake-up call.

if we're getting transactions that size that shows tremendous confidence. >> they're been trying to get back their stake with vodafone. should we move on to niningy? just before -- i do like at&t as the place to go if you get hammered today. >> 5% dividend on at&t. >> not bad, right? >> not bad at all. >> nike, i tend to be very suspicious about this kind of call. this is a price target bump, okay? ahead of the -- >> bank of america, right? >> right. they report this week and they were talking about moment up in basketball shoes. they're saying that the futures could be very good. i want to caution that unless they've got real good feel of this thing, you don't like to buy ahead of a quarter for a company like nike that tends to be so opaque. maybe basketball shoes are selling. don't forget, we have a china issue there that do a lot of business in china. i always question whether we have a view about what's going

on with china. i like to stay away from this kind of thing and pbh upgraded today and it's been on hold and the -- this is barclays, resumed coverage. that's another stock and a very high dollar amount stock that's apparel. i fear apparel right here is not a place to go. >> no apparel. >> the futures with nike, watch verizon and you've got the call there from citigroup. thank you. >> fasten your seat belts, everybody. it could be a wild open and post 9 at the new york stock exchange. all cyprus, all of the time. we'll find out and the opening bell is a couple of minutes away.

today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe?

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[ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. and you're watching cnbc's "squawk on the street" this monday. we are live from the financial capital of the world. the opening bell set to ring in 45 seconds' time. cyprus say concern, jim, but the context here is let's see how this thing plays out. it's a small country and we have a pretty strong market on our hands. >> it's good to keep in perspecti perspective. we were talking over the weekend, brian and i, the banks are going get sold, but think about it because our banks, the standards for our banks are so

rock solid versus the rest of the world that to sell them here, and i know they'll come down a little and you might look back and regret if they go down 3%, 4% without you. >> regret not getting in when they drop. >> not the open. not right now. >> i'm just saying that our banks are all going to be off and by wednesday afternoon, after the fed you'll say, you know what sfwh i could have bought j.p. morgan at 48 and maybe that would be a good thing to buy. wells fargo, 36 and interesting to buy. whatever your price target is here. >> let's run through the bells here at the big board. women for women international. helping survivors of war and conflict. finance international providing financial education to children around the world. >> that's great. >> right out of the gates, we've got the nasdaq composite down by a little bit more than 1%. feeling the brunt of the losses early on in trading. >> isn't that funny?

>> google was, frankly, was there a note last week that they didn't talk about, that google may have trouble making -- look, i'm just pointing out that there is an old -- new tech came under pressure last week at the same time that the western digitals and the sandesk. >> i can say something about google for a second? >> no. i'm sorry. 2 got zero play and nobody cared. i'm the only one that scared now it's ebay. >> and it came out with a big report that basically said in their testing, paid search which is 90% of google's revenue. >> yes. >> made no impact on click through rates or results. that basically free, just being out there with your meditags and everything else was just as good as paid search. it had all of these algorithms

and i didn't understand half of it, but i understood the conclusion which was ebay saying paid search didn't really work for them. >> and ebay may have an investment. >> they may and i say take it with a grain of salt and i did find the report interesting if other companies figure out that jim cramer is in yellow at the top on google because you paid and jim cramer is three down for free -- >> that's very -- >> just something to look at with google. i seem to be the only one who dares. >> i was focused on jim stewart's excellent point about working for google and the perks that you get. >> it sounded like heaven because people are sitting at fire truck tables in their manhattan headquarters and it's all about free massages and at some point you'll have to work. talk about what all of the employees do. >> theoretically it makes them more productive. working away in a cubicle.

>> yes, exactly. >> because the idea is don't go out. >> right. stay here! have fun, too. i was surprised the markets were interested in those kinds of things. i would have thought they brought lunch. >> this was a rocket scientist google building and it was filled with guys who could put men on mars, but instead were trying to figure out algorithms. >> i know cyprus is everything today, but we have the nfib housing data at 10:00 eastern and we have tomorrow. i'm more interested to know about stephen hilton are people going to say, sorry. i'm canceling my home contact because of the bank in cyprus. i'm interested to hear what the fed will say on wednesday and it's a big week with cyprus included. >> at the same time when you look at the charts, but whirlpool. sherwin-williams. there's no -- the carpet

company. these all trade like small caps and i just think they're too overheated. >> it's a sell-off at this point and the s&p 500 is down by a full percentage point and they're down also 1%. >> we knew the spring market going into the session that the banks feel the brunt of the losses here and a notable standout and this is one that has been used rightly or wrongly as a process for what is going on in europe and we're seeing it down by 2% and citi down by 2.5% so banks, really helping to lead this market lower at this point along with technology. housing, to your point, brian, if this is a sector that we're watching 4% across the board. >> last week i was in las vegas. >> great interview with frank play. >> he's cut a million dollars per store. >> that's incredible. >> per store. on average. the sales of service? >> my home depot. i'm not kidding. i love going to my home depot.

>> think about that, a million in cost per store on average, per store, and i asked him are you as lean as you can be? he said there's always room for operating efficiencies and they were in vegas and they were smiling and they were happy and home depot had their biggest quarterly spread on comparable same-store sales against lowe's. >> that's the biggest amount since the -- isn't it how weird they held it? >> by the way, excellent stuff about how the big black -- one-day friday is coming. that was just -- i like that. >> meaning they're about to come into the strongest period and that stock's going get hammered and -- >> and my charitable trust owns that. >> he'll kill me, but jim won the miracle gro. if you're growing marijuana legally it does take a huge amount of soil and expensive soil. it's lucrative for his business.

>> marijuana is the play? >> i sort of joked around and he said it takes a lot of soil to grow hemp. i'm just -- >> i'm going to get my marijuana flats. >> woody harrelson -- >> it's not legal here, though. >> buy the flats and frank blake in colorado and they're selling marijuana flats? >> he's just saying it takes a lot of soil, read into it what you want and the company grillmaker, they all said that things were getting better. >> it is not good to look at s nasco stock. these stocks are so red hot that i would just think that they could go down a little. >> and on i know i'm being a show hog. masco said something interesting that when someone sells a home and buys a home they get it on both ends a good way. they next up their home for selling to make it look better and then they buy new ones when

they move into their house. every home transaction is really a double sale. >> and frank has often said that we still haven't seen more than gdp housing numbers. in other words, that people are still not spending more on their house versus the gdp growth and that could happen this year. i'm looking for a very strong spring selling. >> by the way. we will see the housing starts number and people are thinking it will be less than a million for a year and that is not something that people are getting more excited about, and there's interesting stuff going back. >> the number of people could forget cyprus very quickly. true or false? >> the stocks have already, they acted as if it's going to happen, it's a foregone conclusion, so will it be a sigh of relief? i don't know. it will be a confirmation of what people believe in the markets? probably. >> i do think to ignore cyprus is wrong because it was not the way, it was like a sequester. they took 9% of everything and can you imagine if the government was stupid enough to

take 9% and say oh, we did this. we did give the cyprus haircut into the department and into head start. oui no one said anything and they do a 9% and everyone goes crazy. >> i've said 2.3% is the new magic number. 2.3% was the amount of the budget of they is quester and it was the amount of the payroll tax reset and it was the amount of tax put on medicare devices under obama care. everybody is now saying 2.3% will destroy it. the sequester, payroll tax hike and the new tax on the medical device makers and all of those are effectively 2.3%. >> do you think it's a fibonacci thi thing? >> it's a 15th century mathematician. that's how i spend my time. >> i think it's worth it. >> this is going to be the fed week. i hear 2.3%, and does that make you feel good or bad about the growth of the country? in other words, are we -- are we getting hotter like frank blake

says or can the fed say, look, you know? it's not getting hot. >> you were talking in the break about goldman sachs and deutsche bank raising the target to 1625. deutsche bank raised its gdp target to 2.3%. 2.3% in 2013. >> 2.3% and three is not the magic number. >> 2.3% and when you were going through that i was -- that was -- yeah. blew my mind. >> she has steam coming out of her ear. >> i think this is a very big issue. does the fed look at something like a goldman sachs, sup earnings numbers and say this is time to start backing away and goldman sachs which essentially put together its note on the s&p 500 to 16 point and probably deutsch, too, prior to the cyprus news? so does deutsch or goldman sachs come out today and say, oops? probably not. >> goldman sachs wishes to retrkt. they'll put the cypress weaver

into their model and you have to make a steam punk. >> let's play that in a negative way so i can feel in sync with people who call and talk to me. oil and gas stocks. if we really believed that there could be a further slowing in europe and a further slowing in asia, is oil, brent, and those stocks should be sold? those, one of our viewers pointed out 2.2.3 and 2.9 is a tax under 100,000 euros in deposits. what does that mean? >> thank you, darryl, and your other brother darryl. >> let's check in with bob and he's on the floor this morning with more of what's moving. >> happy monday. weir well off of our lows and now we're only down 72 and the financials are weak and energy stocks and some of the materials are down 1%. all of the gold stocks are to

the upside. you know, i asked around saturday and said why did they go after the deposits so much and apparently the answer i got from people who watch this stuff was that was all there was to go after and there was not a lot else they could seize in any way easily and with all of this said, can i just take the other side of this about not protesting too much? there were plenty of one-off taxes in europe. the italians have been screaming for months about this. they had a whole new bunch of taxes on their financial assets and some of capital gains and not all on deposits and there were a lot of one-off taxes in europe reese leent and will we have some kind of bank run? there have been safety programs in the last two years put into effect and they have the bond-buying program and the ecb, able to buy cheap loans and the ltro program and we have emergency assistance. this greatly reduces the chance that there will be a big bank run now. and on top of that, you all heard, everybody's been talking about the fact that cyprus is a money laundering haven and i saw

the story from goldman this morning 68 billion euros is four times their gdp. that's the magnitude that's higher than any other country in europe or the united states. did you hear the rumor that was floating around? gazprom, the russian gas giant is offering to bank stop the whole loan in exchange of all of the gas and exploration rights? cyprus and none of this has been confirmed and it gives you an indication of how crazy things are. i'll tell you what worries me, not the run on the bank. this will strengthen the antiausterity crowd. this will hake it a lot more difficult for italy to form a coalition because the fact that they'll all be strengthened and they go to a second election now and they'll have a much better chance of really cornering the market because the anti-austerity crowd says they're seizing our deposits as well. we know the european think bahhing union and remember this idea and they'll all get together and put the banks under the ecb roof. you know who one of the tenants

is the european wide depository scheme to guarantee deposits and what's going on happen when that happens? you see what happened? cyprus, how do you know you won't do anything with everything everybody, and this makes banking union more difficult. what does it mean for stocks right now? folks, we had a 3% correction at the end of it. and that was on italy and it's going to be a very, very minor event and if you can't, you've got problems. the big of the thing, guys, 10% increase in the s&p and now 8.5% increase in the s&p hedge funds are only up 4.9%. so do you guy get guys taking profits or some guys saying now it's time to buy on the dip. this can go either way and it is very important in the next 24 hours. back to you. >> i have to tell you something. that is the $64,000 question. noble energy, nbl and cyprus have had a big deal. i know the russians want this natural gas. it's been the talk of noble.

will the russians get this natural gas from cyprus? watch nbl. the company's been on fire. they have great reserves and don't forget out of israel, too. >> rick santelli at the cme group. >> thanks, jim. it's pretty hard to solve insolvency problems and cyprus is that big on the global scale and there are similarities and the one similarity on this trading floor is look at the gm bankruptcy in the rule of law in the pecking order of financial liabilities, are there similarities? does it rhyme? there's definitely a little anxiety here and how it works is out anybody's guess. right now safety doesn't seem to be as rampant as one would expect. look at a two-day chart of ten and certainly we're down a handful of basis points, but if you open the chart up year to date you can see the pattern and it hasn't been violated that much and we're in a seven-week low yield and look at the backyard of cyprus and you see a

different picture and these are ten-year booms and look at year to date and we're making new year to date low yield on the boom because the comp is it's under 140 close on december 31st. let's switch gears here. let's look at a november 1st start date to the euro. you can see that the euro right now is hovering at the lowest levels based on the close that we don't yet know about december 7th. pearl harbor day and it was comping back to november because it isn't on its lowest levels. if we look at the spread between boons and tens that i talked about before. if you open it up to the summer of 2010 you can see, hovering in the mid-50s the comp goes back to that point and we are continuing to handicap relative issues and not only of a strength in the economy, but weakness in the banking system predicated in that spread. brian sullivan, it's all yours.

>> why don't we go to sharon epperson before we go to commercial? the nymex? >> we're looking at gold prices here and that's basically where you'll find the safe haven for a lot of folks who are so concerned about what's happening there in cyprus. we're looking at prices above the 1600 level and this is the first time this has happened this month. a lot of traders say we need to see a close of 1610 for there to be significant upside momentum and we are above the 20-day moving average and that is technically significant as well. elsewhere in the commodity sector we are seeing lower prices for copper and oil and it's a major factor as the euro continues to crumble here in light of cyprus. we're also watching what's happening in terms of what the cftc is going in terms of net losses with the wt icon tract and i've slipped to the lowest level since the beginning of the year and that could be another factor why we're looking at weakness in the wti oil market.

>> and you've been talking about natural gas that continues in this session and we're look at natural gas prices that gained 30 cents in the last week and that has a lot of what we're doing with the cold weather forecast that we got last week, brian. keep in mind, as well that we've seen the net short positions flip sense the first week and that's a big change. thank you. >> sharon epperson. coming up on "squawk on the street" are more consumers looking to trade in their iphones now that the samsung galaxy s4 has been unveiled. we'll speak to someone in the business of consumer electronics trade-in and we head to break this morning. bright spot. look at jc penney and melissa lee pointed this out to us. what's going on with jcp? >> somebody get herb greenberg on the phone. >> if jc penney converted to reitlike units it could go out

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>> and take a look at the cnbc real time exchange where we have the s&p 500 heat map mostly a sea of red, but in the green, one of the stocks trading to the upside on this down day is hewlett-packard. hewlett-packard shares up by 2%. morgan stanley with a big upgrade on the stock with overweight rating and cash is king, talking about a 35% upside with free cash flow guidance for the year and we're seeing the shares respond to this one with the upside on fcf and cash flow as well as the epf. >> the stock was down 55% and people felt their balance sheets were stretched and best buy's balance sheet looks pretty good and hewlett-packard's balance sheet looks pretty good and the

last leg down is being repealed. i'd love to see actual earnings momentum in hewlett-packard, but you can argue that the worst is over and therefore it shouldn't have gotten to where it got. when you see these upgrade, upgrades, upgrades, does anyone ever feel they're late? can you wait? >> that's why it came out in november or december, they could have caught the last leg higher, but they are saying to their credit, epf will accelerate on the $2.2 billion with cash savings and there could be an acceleration or re-acceleration in terms of return of capital to shareholders which would really be -- >> it would be interesting if that happened. >> it would be. >> jc penney. >> the reit thing. >> it's hopeful. >> a store inside of a store. they could have a jc penney inside of a montgomery ward and dayton hudson. >> that is a 2.3% chance of happening.

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♪ ♪ "six in 60," six stocks in 60 seconds. >> j.p. morgan says time to go underweight on this. it is a european stock and i totally get why they want to say that and i agree. >> honeywell. this is one of the parabolic moves and people keep saying this one is good. i do like aerospace. >> citigroup, love utx. that is with my charitable trust. >> if this one turns then we do have a turned market because that's a big market. >> boise cascade.

everybody is neutral. there is a lot of hoopla about it, but housing is too hot. >> michael -- speaking of hot, michael kors is booming. >> they did that million shares -- they did the 10 million share secondary and it was just hideous. it's only selling at 22 times 2014 and that does seem cheap given the growth. >> the upside. >> cypress semi has a good yield and the insider buying is just tremendous and they are in a lot of devices that are selling well. >> "mad money" tonight, what have you got? >> i'm playing oligopoly. i'm promoting a series of the great oligopolies and the pro-trust division of the justice department -- the antitrust division of the justice department is where the money is now. >> you'll do fine every time, jim. >> how about pennsylvania? >> all right. we have breaking news right now, jim. we have home builder sentiment coming out when we return and that will be a big number and housing starts tomorrow. we'll take a short break. back with the breaking news.

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just came in at 44. we're looking for a number at 47. the last two numbers have been at that level and that level represents the best level in close to six years, but this number brings us right back. that number is 44. that number brings us right back to october, the lowest since october which was 41 and we leaped up to 45 and have been at the mid or higher 40s sense. does this mean housing isn't as good as we thought? one number is only one number, but it really didn't happen on a very good morning. melissa lee, back to you. >> thank you, rick santelli. let's get to the road map for this next on hour. a small country in the european union causing big concerns for the global market. cyprus is considering taxing depositors so we can get a bailout and we'll break down the impact on the u.s. market straight ahead. >> we'll go on the ground in cyprus and talk to a former presidential candidate and this bailout could destroy the country's economy? do you care? he'll tell us why and give us

his alternative view. >> and we'll get the reaction to the home builder survey just released and we've got an exclusive interview with the ceo of meritage group. >> and they'ric making a big deal with boeing competitor airbus so they'll have all of the details. >> let's see what exactly is happening inside first with the bailout. they clearly, the question is is it a big policy mistake? our cheer international correspondent michelle caruso-cabrera has more. >> it imposes losses on people's savings accounts. cyprus needed a total bail out of 17 billion euros and they needed to to fund their banks and deficit. they said we will only give you ten and you have to come up with the other seven. it led to runs on atms in cyprus and protests as the president arrived at parliament. here's what they decided to do. they're going to tax bank depos

sxits the ox original plan on saturday, 10% if you have an account larger than 100,000 euros and here's what led to the protests, 6.75% if you're under 100,000 euros and that's fdic deposit insurance. market watchers were aghast that insured depositors would be hit, but the insurance was essentially a falsehood. what if citizens in italy or spain begin to think that they being lose their money even if it is supposedly insured? could that lead to bank runs? it is so controversial the cyprus parliament couldn't get it passed yesterday. they say they would do it today. it didn't happen and now they're trying for tomorrow. they are re-working the plan so the smaller guy is not hit so hard, but still, it appears they're going after insured deposits. why did they do that? they went after banks because that's where the problem is and that's where the money is. cyprus needs a bailout because its banks are bust because the banks bought a lot of greek debt

that went bad. they have a huge number of deposits relative to the size of their economy and that last part is what's so important, guys. it's why some people think that maybe this isn't going to be that big a deal that if the rest of europe and other europeans can say that won't happen to us because our banking system isn't nearly as big as cypress' was relative to the size of their economy so there's less of a chance of us going after our deposits. we have to see how sophisticated and intuitive the rest of the europeans are. back to you guys. >> that is the key point. they couldn't fund it any other way. it happened in italy and the debt to gdp ratio would be 145%, 150% and it wasn't sustainable and the elephant sitting in the room here is the rest of europe believes that they're laundering money for the russians. >> yes. yes. >> on one-third of the bank deposits are actually russian money or the companies that are in cyprus because they're so low

and it's a good point to hide cash. >> remember, the way they've done bailouts before is they impose austerity on the population. now this way you impose austerity on foreigners, right? you're going to tax foreigners instead of taxing your own people. that's one of the rationales for doing this. >> you don't go into that cycle of more austerity and the worst economy, more austerity and worse economy. >> right. >> you can see why they've done it. >> you can. i think the real is why would you go below the insurance threshold? it's such a killer of confidence. why would you risk that and i am told by numerous sources and it's because the president of cyprus didn't want to go above 9.9% originally the same way the dollar store doesn't want to price over 99 cents and he didn't want to tell the foreign depositors that he would take 16% of their money. >> in essence they're taxing the poor in order to keep the

offshore on moo. >> to keep their business intact. >> great reporting. we'll come back to you in the show. >> let us bring in charlie and director of research with ariel investments as well as gary thayer, chief macro strategist with wells fargo advisers. gary, first to you. does this change your overall view on the u.s. stock market? >> no, it doesn't really. we've seen a lot of bad news out of europe over the past couple of years and despite these periods where we get the bad news our economy is holding up very well in that period, and i think investors here in the u.s. who assume the worst-case scenarios because of what they've heard in europe haven't really been rewarded and instead it's been better to focus what good is happening here rather than the bad things that are happening in europe. >> you know, charlie, we look at banks and we're talking about the big ones in cypress and bank of cyprus popular and what about the fear for the bigger banks in

europe? is there a risk to deutsche bank? is there a fear, really that all of a sudden the eu will impose these kinds of restrictions and taxes on the european banks in your mind? >> probably not, i'm russian, by the view, and we've always viewed that sign us have where we send the money to get it away from the czars in the old days. it has a special role in the russian economy, but it's not going to happen. the whole european banking system and the whole world banking system is tied together and when people get nervous they leverage institutions and so it's bad for deutsche bank and bad for morgan stanley. >> gary, i'm curious, because if you take a look at the overall numbers of the major indicis, it does look like the bull run is pretty resilient at this point in the context of what is going on in cyprus. you take a look at the u.s. financials and the ones that have been used in the recent run is proxy and what's going on in

europe. morgan stanley, for instance, which is down by 1.3%. would you step in and buy as these financials are close to multi-year highs? >> we've been encouraged that the financials are ing better because they've been lagging quite a bit in the last few years and we're still underweighting the financial sector. we still think there are still some problems in europe that are, you know, a concern to u.s. investors here for our banks, but we're not recommending an overweight or anything. we're still underweighting the financial sector. >> so you think in some way there is some sort of contagion from europe to the u.s. financials? >> i wouldn't say it's a real contagion, necessarily, and i think it's a fear of contagion that is holding the banks back. obviously, our economy has done much better than the european economy and our financial sector has still been lagging primarily because of the concerns about what's happening around the globe. we are global and that's a big factor they think is hurting the

sentiment in the financial sector. >> let me double down on the point that is being made because this is a change of policy within the european union to emphasize that and no longer are the taxpayers to fully bail out the banks and legislate how sovereign debt will bail out the banks and we've seen it in spain and in the netherlands and we now see it in cypress. of those involved in the banks and down further down the line and charlie, that is perhaps the bigger point to come out what we saw this weekend. >> yeah, but let's keep emphasizing this point. this is a special point and the cyprus banking system is a much bigger share of the cyprus gdp in all of europe and maybe the whole world and in order to get the support they needed they had to go down and this was a mistake to go below $100,000 and everybody knows that today and this is not going to happen. >> my concern would be when you go to italy, are the italian bondholders going to stop for now as a greater extent.

>> bondholders, absolutely they're not deposit insured. bank bonds are going get hit and they should get hit and they should be taking some of the burden here. >> you know what, gary? when we look at the macro market, you have morgan stanley and i was looking at a note that they upgraded it, and deutsche bank and goldman sachs raised their price target from 1575. so you've got all of these big firms with big sell side desks coming out of theket. how much of that is going to push this market, right? how much of that is the retail activity that we're starting to finally see again? >> last year, a lot of people thought the economy would be bad this year and a lot of analysts and investors are realizing that things are better than they thought they were going to be and that's why we're seeing some of these upward revisions to forecast on the market and the economy, and you know, that can be a healthy thing. if the economy is getting better

and investors begin to realize that more fully and that tends to be positive for the market and it's not speculative if conditions are improving and we think this is a fundamentally better year this year than last year and hopefully we'll see more advances in the market as we go forward. >> charlie and gary, gentlemen, thank you very much for joining us on "squawk on the street." >> thanks for having me. >> we have a retail or the move. and the headquarters for the market flash. >> jc penney in the green this morning and oppenheimer saying they visited a few jc penney stores in new york and new jersey to check out the company's no joe fresh shopping shops. the verdict, they were impressed. the launch of joe fresh women's occurred on schedule and customers seeming pleased, they said. analysts telling clients there are a lot of near-term risks on this one, but remain optimistic that it should prove successful and they rated it perform with a price target of $15.

jc penney up 5% right now. melissa, back to you. >> josh lipton, thanks so much. >> shares of amazon rallying more than 40% in the past year a lobe and dan niles of apple says the retail website is beginning to show some serious red flags. we'll talk to dan right after this break. and stocks are coming off their lows. we'll keep watching the markets on the heels of the cyprus bailout. tomorrow the vote on taxing deposits. we have mostly a sea of red on the s&p 500 and we have a couple of notable bright spots and hewlett-packard for one up by 3%. stay tuned.

>> amazon's unique business model getting a cut and handling logistics and are we seeing some red flags right now from the e-tailer? we are joined by dan niles chief investment officer from alpha one capital marks and it does feel that the sentiment does feel skeptical and we had j.p. morgan downgrading the stock last week, some of the concerns that you're raising right now and that is decelerating revenue growth compared to the multiple that you're paying. why now? >> i think amazon is just sort of getting to a lot of large numbers. if you look at them, their percentage of total u.s. e-commerce which is around 225 billion, they're getting up to around a quarter of that, and i think you're seeing that in the revenue growth rate, so if you go back and look at june of 2011, the revenue growth was 51%

and, you know, from that period of time it's gone 51% year-over-year growth, 25, 27 and then 22 in the most recent quarter. so it's been a pretty straight deceleration, and, you know, investors are okay paying a high multiple if you're thinking the opportunity is open ended, but at this point you've seen the growth rate cut more than in half, and i think the next thing that will probably get affect side profit growth which is going to be the really big problem in the future. >> is this what happened with walmart? at one point walmart, and it's the world's biggest retailer and it was climbing to that point and it was trading at a higher multiple and it reached the numbers like it mentioned and it went flat. >> you brought up a great example in walmart and you've seen it in technology before. microsoft is a great example, as well. the revenues doubled over a period of time from what i remember and the multiple got cut in half because the growth rate was slowing and it's the

same issue with amazon is that they're doing incredibly well, but companies like walmart, for example, and others are starting to do a better job in their e-commerce business. i recently bought something off of best buy off the internet and i was able to go get it in the store. a lot of companies are doing things like that or you can buy on the internet site and then you can walk back into the physical store and return it if for some reason it doesn't work out. so, you know, it's not like amazon's not going to continue to grow quickly or gain share, but the problem is are you willing to pay 85 times price to earnings or 24 times ebitda. look at ebay as a different example. and they grow 18% year over year and amazon grew 22% and you're paying 22 times ebay versus 85 times for amazon. you're taking a big risk with that multiple and that's the way you need to think about

investors is the risk reward. >> also following the same storyline of the accelerating revenue growth in lieu of large numbers and at the same time it never traded at the multiples that we ever saw with an amazon or an ebay. what's wrong -- because you think apple is not making products people want anymore. >> and it's not just me. you can just look at the market share numbers, right? that's the ultimate arbiter of what they're doing and if you look at apple's share of smart phones a year ago it was about 19%. if you look at apple's share of smartphones in 2012, it was also 19%. compare that against samsung. samsung last week had a new launch of the galaxy s4 and it was roughly the same as smartphones which was 19%. 2012 they finished at 30% and the phones they're producing are bigger. in some cases they got very low

price points and they're in all of the markets and that's really, you know, the good thing about apple is they build a great phone and the bad thing is a lot of people can't afford those phones and that's a big issue. the galaxy s4 is launched in 155 countries last week simultaneously. the iphone is only sold in 100 countries. if you can't get the phone it's hard to buy it, so that's the problem. >> what about the transformation of the business, if they do launch phones at lower price points or relaunch the product cast degree. or is that just not on the same scale of magnitude as present iphone sales? does it not lose the needle, if you like? >> no. you asked an excellent question and it's the right one. the problem is this. if you go back to when apple reported the quarter, several analysts asked tim cook that question and the answer was,

quote, we put a lot into screen size. they're telling us, this is the size you're going to get and you better like it and it's the same question in terms of going into the low end of the market. somebody asked about that and the most important thing to apple is to make the best products in the world and we only want to make the best products. to me, you know, that doesn't necessarily say you can't build a low-end phone if that's what all of those people can afford. the problem is near-term, that doesn't seem like it's in the cards. what i think will happen, though, which is a positive to your point is a new product category. he did comment that they have an intense interest in the tv category and so i think before the end of this year you're going to see them launch something in that space, hopefully and it's not just the set-top box and improvement on apple tv as an actual tv, but that's what could get it going as well as obviously an increase in the dividend or buyback which i think also will occur at some

point. >> dan, very quickly, it's brian sullivan. >> what about nokia? the lumio is positively reviewed. you've got to tie up, the market share is almost so small that you wonder why they're sort of in the market at all. what happens here? >> yeah, i mean, we're not big fans of nokia right now. to us, it seems like they're struggling especially and you brought this up and they're tied to microsoft and you buy phones today, not to make phone calls. you buy phones today for what they can do and what they can run, et cetera and the problem is applications developers and microsoft is having to pay them to develop a lot of apps for the operating system and even though they may be launching on an droid in the future and we'll see if that actually occurs or not, but the problem i have with nokia is they used to have

dominant share just like samsung used to have. and they used to have over 40% share and that's been cut by almost half over a period of time, so we have a negative investment position in nokia. >> right. full disclosure and unfortunately oui i don't see anything that's really changing my mind right now. >> sure. i want to ask you about blackberry. the ceo to an australian newspaper, basically hines says that the iphone is starting to look dusty and the innovation is so high that if you don't innovate at that speed you can be replaced pretty quickly. this is agen, the ceo of blackberry talking about apple's iphone. would you agree that apple is at risk of having a dusty product? >> well, i think you have to separate two things. steve jobs only gave you one product and he told you you'd like it and you did. tod today, unfortunately, a lot of

consumers may want a bigger phone and a new phone and apple is not giving you the breadth and the product line that a lot of us would like. i don't know if you call that dusty or not, but what i would say is you don't have a lot of choice. when the iphone first came out it was the only thing out there that could do what it did. today, i would argue samsung makes a better phone and the good thing about an cell they have a great ecosystem in i tunes. i have over 1,000 songs and books and movies in there so that kind of keeps me locked in so i'm probably not going to be able to move to a samsung phone, but in emerging market countries where you're buying your first phone, don't forget, apple's total share of the handset business is 8%. so the other 92% that have other phones, you know, they may move to samsung and apple may lose out on those future sales and that's -- whether it's a dusty phone or not, i don't know, but i don't think it's the best phone out on the market. maybe the best ecosystem, but

not the best phone. >> dan niles of alpha one capital. >> thank you. the sentiment is dropping in march for the third consecutive month. coming up, we'll go straight to the source and we'll speak to the ceo of home builder meritage homes. steven hilton. >> are many people trading in their iphones? samsung's big galaxy s4 launch. neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids,

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>> breaking news within the last half hour, home builder sent i want dropping for the third straight month. meritage homes has been making a push to expand its building locations in the southeast regional market and steve hilton, ceo of meritage homes joins us now. meritage homes is ninth largest home builder, and good morning. >> good morning. so how would you sum up sentiment for your business at the moment? >> our business has been strong and we've had very brisk traffic and sales activities throughout all of our communities and it's all of the way if the south to the west from california to

florida, and the business in texas, arizona and colorado. so i don't -- i don't get those sentiment numbers because they're not in line with what we're feeling. >> what's happening to your margins at the moment? you started coverage of you recently with a buy rating, but they did say that you're a smaller size compared to your peers resulted in unfavorable pricing and that your margins haven't been growing anywhere near as fast as your competitors. is that fair comment and is that situation changing? >> i think it's been changing and our margins are going to be increasing and we're increasing prices across the entire country particularly in the west. as you know, new home prices are expected to rise about 9% on average this year acr t country and even more so in the higher demands in florida so i think our margins will increase over time. >> the markets that you focus in on california as well as florida, what do you think is making homebuyers and potential

homebuyers more optimistic and will willing to take the plunge and buy a new home, is it what's going on in the job market and is it because of the rise in the stock market? when you look at the wide variety of metrics, what is correlated to your neck of the woods? >> i think supply is very low and in most of the markets we build in and demand is strong and affordability is at the highest point it's been almost ever so i think that coupled with job market and certainly a market like phoenix markets, like dallas, houston, orlando, and we have big franchises in, their jobs are being made and the economy's getting stronger and that's helping our business a lot. >> affordability is strong, steve, in part because the average 30-year fixed rate mortgage is 3.6%. do you have a magic number of slowdown? is there a mortgage rate at which you noticeably see a slowdown in your sales,in your

contracts? >> i think we get more nervous if the rates are at 7% or 8%, but we have a long way to go from here to there -- >> i mean would 5% be okay, steve? >> 5% would be fine. i actually believe as rates rise business will get even stronger. people are sitting on the fence will come back into the market and business will be even better. >> we have a long way to go to get back to a new home market. we're still building less than half of the 30-year average new homes in this country. >> just before we let you go, steve, barclays is using to identify what parts of the geographical area are going to improve coming from sea grade to a or b and it has to do with school districts and crime rates and you're analyzing that data which sounds interesting. isn't the bigger issue moving forward to identify where the institutional sellers that have bought are about to sell because

a lot of people believe you're going have a series of bubbles in markets that will deflate each time blackstone puts 1,000 properties on the markets. are you aware of that and is that something that will be an issue for you? >> we follow that closely and i don't think that will be a big issue and most of the homes have been purchased and they were in neighborhoods that we're not building in. we're more focused on the a and b markets. a lot of those homes that were foreclosed and sold in distress were in the c markets and they were in the high quality a and b markets that we're building in today. so i'm not concerned that there will be a bubble in supply that will compete with the homes that we're selling today. >> mr. hilton, thank you for kicking off your week with us. nice to meet you. mr. hilton, ceo and chairman of meritage homes. thank you. up next, we'll take you on the ground of center of fine action. we're talking about cyprus, and the former presidential candidate says he has a better

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fears of the situation in cyprus could create chaos this morning. the country is considering taxing depositors, in other words, people with money in bank accounts in order to fund their bailout. earlier today cnbc's julia spoke with the finance minister of cyprus michael saris. listen to what he had to say. >> absolutely.

there is no capital restrictions. people can move. we hope people will believe us, they will believe the collective leadership of the european union that this was a necessary step, but a single shot at the problem and that from now on they can be very confident that nothing will happen to their savings. >> well, the vote still has to go through. we are joined now on the cnbc news line by lakis loannou, former presidential candidate and president of the local lasok party. welcome to cnbc, sir. what do you think of the details of the bailout as we have it at the moment and in particular this plan to tax bank accounts? >> hi. the government has permitted a

crime against cypriots to put taxes on savings for accounts under 100,000 from the moment cypriots have another -- six months ago from last june. we have tax increases and the cut of benefits, student loans, social services benefits and everything was cut in cyprus. it's a shame it was done. [ indiscernible ] is to save the fat boys, the big accounts and the 12k billions of the russians and they sacrifice the cypriots to save the money for these people, and i want to say that our presidential system has aloud the president of sign trous make the decisions and they can go through the parliament, but i believe if

they go through the referendum and every single person can vote for his own future. personally, we go with the proposals. we can avoid any taxes or any savings. and we put it toward the president, but unfortunately, the government in cyprus doesn't want to touch all of these big boys. for example, why cyprus doesn't want to tax all of the cypriot accounts in switzerland? we know cypriots have represented cyprus with 12 to 14 billion there. we've got -- we've got -- >> it's an interesting point. >> why they don't -- we know american, england, germany, greece taxes this money. tax-free money there and -- >> let's be honest, in a word, sir, do you think it will get past parliament or not?

do you think you will get the vote or not, in a word? >> i think it is very difficult to get through. i think it will get through, but the damage is done. i think probably the banks will stay shut this week and everybody will throw out their money. so we'll leave it there. lakis, president of the lasok party in cyprus. senior economics reporter steve liesman has insight on this. >> melissa, thanks. the cyprus debacle has kept the fed on edge and they maintain an aggressive stance on monetary policy. it is unlikely that the fed would increase the policy buying 85 million in mortgages and treasurys and that was because it was already concerned about this at the last meeting. although strains in global financial markets have eased somewhat the committee continues to see downside risk to the economic outlook. that was already factored into the $85 billion they decided on.

it is under no illusions that europe's worst problems have been solved. it was repeated hits from the crisis in europe that in part led the fed to this continuous policy of qe. the market -- i want to share with you a little bit of the news that we'll report tomorrow from our cnbc fed survey. we've been asking the last couple of months and do you see it as a sign of real progress and 64% of the market respondents say it's only temporary. i think neither the fed nor the market is fooled by this, i spoke this morning to a former ecb official and he says there are substantial questions about the reported $10 billion euros needed to shore up the cyprus banking system and they were bashed by popular support and i want to read from you an editorial from the cyprus mail that $10 billion uri you're eur

blamed the economic difficulties that was caused exclusively on the banking sector. the official said neither the icb has independently verified this picture and what they do in these cases is they simply take the word of the local regulator as to how big the hole is in the banking system. >> given that the rest of europe is riddled with money laundering and probably not the best approach, steve, on reflection. >> i don't understand, simon. >> okay. we'll leave it there. thank you, much. >> sure. >> straight ahead on the program. a record order from airbus for one of boeing's top customers. we'll break it down and what exactly it means for boeing and we're right after the break. stay with us. [ male announcer ] when you wear dentures you may not know

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conquer them with the exhilarating is 250. get great values on your favorite lexus models during the command performance sales event. this is the pursuit of perfection. welcome back to "squawk on the street." i'm josh lipton. constellation brands enjoying a pop this morning. the company could be the winner as the justice department and

anheuser-busch asked the court to extend the delay in the courtroom battle between crown and grupo modelo. analysts are bullish on cons tragz and tell me they think this deal gets done and it will be transformative, making constellation a significant beer company with access to imported beers and spirits. constellation up just about 2% right now. melissa, back to you. >> all right, thank you, josh lipton. >> let's talk about jc penney because melissa did notice the isi group first off when you noticed jc penney rising in the beginning of the market and it has been accelerating since that time. jc penney is up more than 7%. isi group, a specialized research outfit coming out with a note suggesting that jc penney being, not in all of the stores, but in about 300, add stores within a store. not the pop-up stores like they're doing now, external

retailers. >> basically leasing. >> pay for the space and become almost a mini mall inside of a jc penney stores. >> department stores often do that with name-brands like lvmh, louie vuitton. >> and jcp investors like the news. look at that. >> i think the joe fresh thing went down very well as well. >> sure. absolutely. we'll be talking to dana in a bit about joe fresh. meantime, let's take a look at shares of boeing down by more than 1% after indonesia's ry ryanair has struck a deal with rival airbus to buy 234 jets worth as much as $24 billion. phil lebeau is in chicago with the details. >> the importance of this order is not only its size for an estimated list price of $24 billion, but who it comes from. so let's break down this deal. lion air announcing it with france along with the president of france and airbus executives

and it comes out to 240 planes list price at $24 billion and let's be clear and they will not be paying $24 billion and there are severe discounties and lion air ordering the a-320 planes to meet demand in asia and ryan air estimates traffic will be up 21% in that part of the world. lion air presents the first airbus orders after years of being a longtime and faithful boeing customer and it places a huge order just a few years ago and airbus will build the a-320 which by the way, goes into production late 2015 about the first time the first time it's delivered and look at the comparison between these two companies when it comes to orders for the two narrow-bodied fuel-efficient planes and more than 2,000 have been ordered and far fewer of 1185. compared to boeing year to date.

no comparison at all. abs has been up more than 40%. boeing has started to tick up within the last week or two, but you can see up 13% lagging its competitor, eads. >> you know the scale and soap of this. 234 planes to me seems like a gigantic order for airbus and a huge loss for boeing. how big of that in the scale of orders that you've seen. >> it's one of the largest you've ever seen. boeing had an order of close to 220, 230 narrow-body planes with lion air just a few years ago. that's a part of the world that's really growing in terms of air traffic so it's a huge order, no doubt, but boeing has landed big orders in that part of the world and also with lion air in the recent past. >> i'll bet it's gao in connecticut and always the winner, phil, thank you very much. >> we should mention that the banks in cyprus will not remain closed for talks until they continue to effectively have a

one-off tax and i assume they're not going to be restocking the atms. >> that's a good question. >> three years ago i was on a flight from athens, georgia, to bruss els, belgium. he was opening and up and i was chatting with him and he was a cypriot parliamentary minister to the ecb and he was telling me about all of these problems they had and then he asked me what i did, and i told him and he shut up and didn't speak the rest of the flight. >> he suddenly realized he was on the record. >> rick santelli tells us, what, if anything, we can learn from the cyprus bailout and later on, blackberry ceo saying the iphone is old and dusty. wow! taking a shot. do customers agree? the ceo o gazelle, the company that takes in your cell phone and buys them back will give us the hard data are trading in their iphones. straight ahead.

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the street." today's rendition of the santelli exchange, it has to be about cyprus. there are so many things here to discuss. how i do really believe that what's going on in cyprus has a direct tie to the u.s.?

no. however, many of my sources have such great opinions on the issues here. do i agree with all of them? no. but i'm going to play a couple and they're so representative of the dozens i've received. i'll read them and then we'll talk about them. let's put them on the screen. source number one. the value of any asset should be questioned when the rule makers bend the rules to benefit from their agenda. there is no difference between gm and cyprus. no one plays at a casino where the odds can change mid play. let's put up the second one. what future, unintend end consequences will come from changing the rules during a crisis rather than maintaining the rules through a crisis. doesn't this create a mistrust of the system, unnecessarily driving up risk prem mums and, thus, the cost of capital going forward? let's look at each of those. now, i'm not so sure that the tie-in to gm is exactly the same, but there is the issue of the rule of -- in the pecking

order of financial liabilities and that was modified. the second one and what's similar about both is basically that rule of law should transcend crisis management. it absolutely ought to transcend politicians and political cycles. that's what breeds mistrust. and that second one in particular was really good because it talked about unnecessarily driving up risk premiums. but we see the federal reserve is addressing that. it also gives us another clue, okay? if we look at markets. let's call these our equity markets. many say over and over how dumb you are, as an individual or group investing scenario, not to be fully invested. somewhat i can understand that. i don't think this is going to wash up on our shores in a direct way, which means buying the equities may be the right thing to do. it swings, whether it's italian

elections, whether it's cyprus, who knows what it's going to be next. there have been white papers that say that should interest rates start to rise, maybe we get the general public to turn some of the deferred tax savings into possessing treasuries. that's a hook in to the same type of driver that we see in cyprus. does this translate directly? no. is there a lesson to be learned? absolutely. simon, back to you. >> extraordinary news, rick. thank you very much. let's talk about the samsung now that the samsung galaxy s-4 is being unveiled, people trading in their smart phones before it goes on sale and, if so, which model of gadget trading sites. gazelle will join us next. we'll be right back.

in the wake of samsung's galaxy s4 launch the apple launched a campaign on the website which includes a list of 12 reasons why people love their iphones while also taking shots at rival advices. joining us now with hard data on the smart phone war, israel, gadget buyback company gazelle.

thanks for being with us. >> thanks for having me again. good morning. >> what have you found so far after the galaxy launch? what do you find they're buying? >> let me start by saying if there's one thing that's been constant over the last 6 or 12 months is the regular introduction of new smart phones in the marketplace and it's just exciting to continue to see that from apple, from blackberry, from samsung. it's excite for consumers and exciting for us at gazelle. specifically to the samsung, you have to look at it in a couple of different ways. if you compare the samsung 4 launch at the galaxy 4 launch last week to the galaxy 3 which launched a year ago what we are seeing is 180% real increase in terms of volume of trade-ins. those are mostly samsung phones that have been traded in. you have to keep in mind that a

samsung launch and for that matter a blackberry launch is very different from an apple launch. that has a lot to do with the gap in time between the introduction, the announce chme of the phone and when it's actually launched in the marketplace. >> the wait is longer, is that correct? >> it is. when the iphone 5 was introduced back in september, it was about a week or two before the phone was actually available for purchase by u.s. consumers. and because we at gazelle give customer 30 1/days to lock in the price and to send us their phones, it's pretty easy to do. and most of our customers will do that in the week or two leading into the introduction of the phone, send in their devices. when the iphone 5 was introduced at that time we saw 700% increase in trades. it was a massive spike in the business. it's very different from a blackberry, very different from a samsung event, especially since the phone may not be available in the u.s. for a couple of months or more.

>> israel, we're going to leave it there. thanks for joining us today. co-founder and ceo of gazelle. >> thank you. all right. so -- wow. my how time flies. that was fast. that was fast. >> time flies when you're being yelled at. >> we didn't yell. >> i'm yelling. >> okay. >> all the time. >> what's coming up? >> "strooit street signss," 2:00 eastern time, 11:00 pacific, noon in that weird mountain time zone we have with like three cities. cyprus, trading through the day. we're going to let you know what to do with your money. could this happen here. also, a big fight about something. >> something. just a weird fight about something. >> probably jp penny. julia is coming on about streaming music. >> potential fights. >> feisty mood today. >> good. good. >> someone is going to get picked up and spun. >> wow. >> you would watch that show. >> i would even watch that. >> even you would watch that. >> thank you, brian. see you tomorrow. >> thank you for having me. here's what you might have

missed if you're just tuning in. welcome to hour three of "squawk on the street." here's what's happening so far. >> the consequences of this are not going to put the ginny back in the bottle even by erratic standards of the past three years. this a biggie. >> europe has too many objectives and too few instruments. and that once again, political system is failing europe and once again the ecb is going to have to do more. >> i'm more concerned about cyprus semi conducting making the quarter three weeks from now than today because three weeks from now we will not be talking about this cyprus. >> the market s do have a big cyprus hill to climb over. >> very good. >> textron, clorox, colgate, general mills, kimberly, mccormack stock, how did they pick up this week? they missed a quarter. pepsi, proctor, i hate discover, delta, kree, cracker barrel!

prosecution rests. >> investors here in the u.s. who have assumed the worse case scenario because of what they heard in europe haven't really been rewarded. instead it's been better to focus on what's what good is happening over here rather than the bad things happening in europe. >> i think supply is very low and most of the markets we build in. that's having an impact. demand is strong. affordability is at the highest point it's been almost ever. >> good morning. if you've joined us already, busy morning here post 9 at the new york stock exchange. we had that big run ten days of gains for the dow. buckle the bit on friday. today as you can see is showing red, more on exactly why the markets are moving into negative territory throughout the next 60 minutes. morgan stanley upgrading the

stock to overweight from neutral noting the tech giant's recent focus on cash generation. it's one of the few members of the dow that he's actually positive so far this monday. bank stocks certainly under pressure. road map for this lour, cyprus now reported going to keep the banks closed until thursday. has to decide whether to tax bank bank accounts. barclays says no need to worry. cyprus problems will be contained. may be working the stock is leading the s&p 500 now. retail analysts dana telsy will give us her take on where it heads next. we've got the ceo and co-founder of simple bank coming up. find out how he is taking the bank out of banking. maybe they'll expand to cyprus. >> we start -- speaking of sim

pr cyprus -- the u.s. markets are well off the low of the session. michelle a ruse ishas the story >> an economy smaller than vermont is causing a lot of trouble for the markets. in exchange for receiving bailout money from the rest of europe, cyprus agreed, everybody accounts that were supposedly 100% insured. this is the equivalent of, say, waking up in the united states to find out that the fdic insurance you thought protected your first $250,000 deposits, that it doesn't. under the original plan announced saturday people with less than 100,000 euros were going to be taxed by 6.75%. if you had an account of 10,000 euros, 675 euros could be confiscated. those above 100,000 would have to pay a tax of .9%. i say original plan because the idea of taxing in short bank deposits is so controversial

inside cyprus the parliament is rethinking it. they were supposed to vote on the original plan yesterday. and then today and tomorrow. and then the banks in cyprus are going to open, it's a mystery. they said originally it was going to be on tuesday and then they said wednesday and now it's going on the on thursday. they moved the twice twice already. here's what market watchers feared the most. if deposits are not safe in cyprus, will europeans and, say, italy and spain, worry their deposits are not safe and start running on the banks? that is why the stocks of the italian banks in particular are getting hit hard today so far in europe. however, thus far we haven't seen runs, that is one of the reasons perhaps why the u.s. market may be all of its lows. additionallies and you've got one guy coming up. a number of market watchers who say this is much ado about nothing and here's why. i want you to look at this screen. the size of the cyprus banking system is so enormous, it's eight times the size of the economy. this is what we're showing you

here is the size of the bailout needed relative to the size of the economy. and the tallest bar there is cyprus. 60%. it's got two different colors because the light pink is depositor money. it's the first time it's been done. ireland is second, greece is third. italy and spain, fairly small. in theory, cyprus could be unique, melissa. we're going to find out. >> we were chatting as to why thursday would be the deadline and what they might have to do before they reopen the banks. presumably sort of -- some sort of back stock from the international community, presumably they have -- >> here's the basic rule. that bank isn't going to reopen until we know it won't fail. >> yes. >> if the bank is going to fail, they're not going to open it. >> presumably, if the tax is voted through in parliament, take that tax out of the bank accounts before they then are able to trade or move the money

on thursday morning whenever it is. >> right. that's the first step. the second step is, will you see runs on those banks. if you live in cyprus, they've promised you, this is only going to happen once. do you believe them? it happens when those banks we reopen? what do the russians -- the russians have a huge percentage of those deposits. do they suddenly remove 30% from the banking system? the entire system collapses. we're back at square one. >> all right. michelle, thank you. the market feeling the impact of cyprus but the bulls are fighting back at this point. market off the lows of the session. let's bring in david cats with matrix asset advisers. david, the market seems so resilient in light of this news and yet you take a look deeper at the sectors moving and you have the european banks, deutsche bank down by almost 4% at this hour. barclays, credit swiss. how concerned spould should we be this is the first crack in the bull run we've had? >> we don't think that it is going to be a crack.

we do think it creates a new level of uncertainty. we think that ultimately europe is going to be able to muddle through this. we don't moe believe this is going to derail the global recovery. we wouldn't be buying on the weakness today because the market is not off too much. if you had a 3% or 5% correction we would be buying and we don't believe this is going to derail the financials recovery which has been pretty strong throughout the last 18 months and we do think that continues. >> david, there's an important point to be made here. presumably the europeans and those who support do not believe their actions will cause mayhem through europe other wise they would not have come to the judgments they have done. these are honorable people. it is reasonable to therefore assume they are light in their analysis of their own countries and the impact that it will have on the american stocks. >> it could be. sometimes regulators make mistakes. the taxing the money under $100,000 or 100,000 euros that was insured probably is a

mistake. they might have to backpedal on that. it's reasonable for the financials to sell off a little bit on that, especially european financials. again, we don't think it's going to derail. we think ultimately the european financials will recover. and we're much more comfortable in the u.s. market which is a few 250i7times removed from thi. reasonable financials last week got a glowing report from the fed in terms of their financial strength. >> going back to the idea, david, you don't think this is a crack in the bull market and you overall like the financials still. we are seeing pullbacks in the u.s. financials of 4% out of morgan stanley, 2 1/2% out of citi and goldman sachs. is this an opportunity for investors to get in at this point or do you think there's more pain as a situation in 150i78 cyprus untangles and unfurls under the next week and they will trade lower here? >> financials are up great this year. a few percent pullback shouldn't be painful. should be part of the normal market action. we think you can, morgan stanley we think is real good here on

the pullback. if wells fargo pulls back more, their dividend was increased substantially last week. we buy it. in terms of stepping in whole hog, we would wait a little bit. >> michael, i want to bring you in. you're the portfolio manager of permanente. what's your take of this cyprus situation? in your view of this week what will have a greater market impact, the fed meeting or the vote in cyprus? >> well, i think the fed meeting definitely. although the cyprus vote will be interesting. not for what it is by itself. i mean, cyprus by itself doesn't concern me. i don't think there's going to be large spread con tags there. at least at this point. although it is somewhat of an unknown. it sets a really bad precedent for the rest of europe. and it just calls to mind again we've sort of forgotten about europe in the last few months here in the u.s. bull market and equities. the fact that there are real structural problems over there

and there's a very anti-growth versus austerity kind of battle going on. and this is clearly not a growth initiative. i think that's the bigger, longer term issue. >> michael, if i'm investing in american equities watching american television right now all i care about is if s. there systemic risk and there is no systemic risk going to come here from europe? that's the bigger point to make, surely. >> well, in the short term, simon, it's right. for u.s. investors the fed meeting is much more interesting and will have greater impact. but in the longer term, you know, u.s. companies, u.s. economic interests will be effected by what goes on in europe. so you can't really ignore it in the long term. but i think in the immediate term, yeah, it's an isolated situation right now. >> all right. michael, david, thanks for your time. is that statement right? is it an isolated situation? just how worried should you be by the impact of what is happening in cyprus or what may happen in cyprus?

on to antonio garcia pascal calls in analyst support suggest that n contagion fears are likely to be contained. thank you for joining us on the program, sir. it's good of you to spare the time in what is obviously a very, very busy day for you. why do you think that the fallout will be contained? >> i mean, we think that you will be better equipped to such prices right now. vis-a-vis that. most of the banks in the periphery are on one way or another programs except for italy but italy to begin with was not a banking problem. in our view the decision was either to have a very large hair cut on the large debt or liabilities both in berlin. i think the lesser of the three was the banking liabilities choice. we don't know the details yet on those. >> sure. just elaborate on that, if you would, because the story we're trying to explain here is that you have a massively overblown

banking system for the size of cyprus. and, therefore, if you recapitalize it, you get, through the sovereign debt, you get to a ridiculous and sustainable 150% of gdp and therefore effectively you have no choice but to be innovative albeit in a way that breaks taboos in this case. >> yeah. this is one way to describe it. i mean, 60% gdp estimated whole in the banking system. remember, this is a lot higher than ireland, 40%, less than 30%. so that is what matters. those levels it will entail a very, very large hair cut and sovereign debt. that would be the alternative, right? remember, there's not much sovereign debt. talking about 7, 8 billion. are you going to hair cut 100% those or are you going bail in some of the depositidepositors. that was the choice. to me, it was the right one. a different issue is how do you

split the bailing money because large depositors and small depositors. that is a sensitive issue and i think probably the market consensus is bailing in the depositor, insure is depositors is the right decision. >> what is the ripping effect of this? we mentioned 60% of gdp is the banking position in cyprus. 37% of deposits are noneuropean. a lot of that is big depositor t accounts. what is the impact longer term if they take this one-time, allegedly, one-time grab of 15% or whatever it may be at the end of the day and those deposits never come back? what happens to it down the road? >> this is a good point. 60% is the amount of bank losses, that you need to plug in. the size of the banking system is multiples of gdp. so you are right, if you deposit a hair cut on the depositors, some of those will leave. but maybe to begin with the size

of the banking system was overblown. you need to have the banking system four or five times gdp to function. you can have a much more banking system to finance the and still have a country that can operate. no question in the near term there will a deposit outflow and it will be tough but long-term, i don't think there is a need for a size of a binking system that we had in the past. >> antonio, just before we let you go we should be clear that the way in which you operate, now here we've seen it with spain and in the netherlands. but the burden sharing is shifting. where do you think people should first look to sell as a result? would it be on the bank bonds or -- we see some of the french banks heavily today. where is now more risky as a

result of this clear change in strategy alleged by the germans? >> i think there's been more of a split between stronger and weaker banks. clearly, we walk into european bank resolution regime that is likely to be moved forward. meaning, applied sooner rather than later, with involvement. in the near term you should expect larger losses taking on by the liabilities. which means that the weaker banks may start trading weaker. you think more between the weak links and stronger links. there's no question that we're going that way. >> incredibly important point. antonio, busy day for you. thank you very much for joining us. meanwhile, the split when jpmorgan jamie dimon and the boards could be wider in the wake of the whale findings and

that's the appearance that we had on friday on capitol hill. so are dimon's days numbered as chairman and ceo? but first, rick santelli, with his own take on cyprus. rick? >> simon, our next guest in about 15 minutes is going to say that we're spending way too much time on this. it really doesn't matter what's going on in cyprus. and as i look at the dow only down 36, the s&p down 6 1/2, he's probably right. but does that mean there isn't a lesson to be learned right now? it's your conclusion but i want to make sure you watch in 15 minutes. i'm going to change your mind.

welcome back to "squawk on the street." value click, the digital ad company enjoying a big pop this morning. jeffries upgrades the stock to a buy price target 35 bucks. analysts say the new chief executive here is very experienced, energetic and properly focus and the unified strategy to cross the clients. valueclick up 57% this year. speaking of that, is there a bull eyes on the back of jpmorgan chairman and ceo jamie dimon. raising questions again about the executive structure another one of america's biggest bank. kayla is here with more on that. >> simon, when the senate last week released the list of

attendees at london's london wha wale hearing, he was absent. the 300-page senate report coupled with testimony from jpmorgan brasds as and regulato painted a picture of dimon as an aggressor. "the new york times" is reporting the miscommune tags with investors has create addie vision among the boards and fresh worries about the potential fallout. last summer the board hired up. the result, a dimon and length think, quote, independent report on the handling of the trade. the problem though that neither or jpmorgan internal report address it the company's awareness. where they are right now, instead the company dismissed the risk as a tempess in a teapot. they are calling for an independent chairman to unseat dimon. one such candidate sources say

would be lee raymond, former chief of exxonmobil and currently the board's presiding director. people close to the board has praised raymond for frequent challenges with dimon. the length of raymond's tenure is unclear. when he attempted to retire last year the board unanimously asked him to stay. unclear at this point what will happen at the top of jpmorgan. guys, back to you. >> one of the things i find interesting is if you ask jpmorgan executives why don't you split the job of chairman and ceo, they have no response. >> that was one of the top questions that came out that the company's investor day just a couple of weeks ago. dimon said life is too short. you want 100% of the control of the company, not eight by% control. he noted when he was at bank one he wouldn't have taken that job if he didn't have both of those roles. he clearly wants the steering wheel, he wants control. unclear if he will be able to keep it. >> thank you, kayla.

cyprus bailout might have an unexpected side effect on offshore tax havens. find out why the super rich might be worried about their friends in places like the kay monday and bermuda.

world's wealthy made more than $21 trillion in offshore tax havens but cyprus is causing the super rich the wonder if the caymans, bermuda and other havens are at risk. cnbc's reporter has more on that. robert, the wealthy. >> cyprus was the deal sounded too good to be true and turns out it was. low taxes, investor friendly politicians made eight haven for tax avoiders and money laundering. russians were the big source of cash depositing $20 billion or more in cyprus. now those depositors, of course, being forced to pay . % on those

deposits and more than $100,000 or more. cyprus is, of course, a very special case but the crisis raises new questions for the wealthy about the rewards and the risks of stashing money offshore. according to the tax justice network the global rich have more than 21, possibly more than $30 trillion stashed offshore. that number is growing fast. of course, you have a growing population of multimillionaires around the world and rising tax rates in many developed countries. wealthy americans avoid between 40 and $70 billion a year through offshore. their favorite, is the caribbean, cayman islands, bahamas, british virgin islands. the channel islands, monaco, switszer land, and singapore. they are demanding information about their overseas account. they want to make sure they don't have a cyprus event happen to them so they're asking about the banks, the countries themselves, and the fiscal

conditions in the countries where they put their money. many are find that loose laws and secrecy may protect their privacy but it doesn't protect their money or their capital. simon, back to you. >> and yet, robert, it's a very competitor space to be in offshore tax haven. financial times wrote, remember, this is putting very regressive, takes much more poor people than rich people. they wrote, the suspicion must be that the cypriot leaders they've got a european bailout, got it through and still going to be able to lure the money through cyprus and keep the russian money. that's an achievement for the leaders. >> it is. still right in talking about how competitive it's gotten for these countries to be seen as tax havens. singapore, the cayman islands, all of the countries quietly saying, look, we're very attractive for wealthy people. lower your tax rates. we're a stable system. while they want to solve this banking crisis they also still want to be in the running in

that competition for rich people's cash. >> yeah. for sure. robert, thank you very much. >> thank you. down here at the new york stock exchange we're down 30 points on the dow. the markets are showing resilience in the face of the cyprus bailout. we'll have lots more on today's market action and the impact of that small island nation on global market. is it just an excuse to sell after a big rally? probably. plus, jcpenney getting a big pop today. is it all about joe fresh or more? we will see whether the department store can keep up this new momentum. "squawk on the street" will be right back.

rising from six-low lows. shy of 13. tempur-pedic concluded an acquisition of rival mattress maker sealy, changing to it tempur-sealy international. an excuse to sell? >> well, you know what, conning

the contagion worries out there it's pretty mild. the dow was down over 100 points at the open. we gained 60% of those losses. and in europe, they regained half of their losses. let me show you watts going on here. down about 100 points, maybe 109 points at the open. move to the upside group might think because money is coming out of europe and into the united states. that may be a plausible answer. well see after europe closes whether that's true whether we sink here in the united states. one reason i'm not sure about that explanation is if you look at how europe has been behaving it's fairly similar. here's a standard. one that everybody looks at. this is the vanguard europe, compilation of all the big stocks in europe. widely traded. very similar situation. started at the lows. near the highs of the day. germany, for example, was down nearly 2%. it's down less 1% right now. most of the european indexes, all of them are off of their lows. i'm not sure it's just all the money is coming out of europes

cascading into the united states story. maybe some people are starting to re-evaluate just a little bit. if you look at the banks and, yes, of course, the big european banks are down 3% or 4%, deutsche, barclays, credit suisse. everybody has been talking about the concerns about run on european banks. i'm not worried about that. two things worry about short term. one is that this is going to strengthen the anti-austerity crowd that are very at much sbreed sbre interested in fighting this austerity thing and mayhem them and may make it tougher to form an italian government. they may feel now their possibility in a second election might be strengthened. anti-austerity crowds, that might make it difficult short term. one reason i think italy is down more than the rest of europe. second, there's a european banking unit supposed to be formed. doing long-term plans and one of the ideases behind this is an

european pan deposit insurance guarantee. that's going to be tougher to sell to local governments. might be able to tax them even if it's a remote possibility it makes that european banking union tougher. let's look at what's on the upside and it's all the sort of risk/loss kind of things. gold is up. metal and mining stock is up. long-term treasuries are up. all the bond etfs are to the upside. biggest corporate bond, lqd. all of them are on the upside. not a surprise but fairly modest moves for them as you can see. >> thank you. all right. let's go to check on energy and commodities. sharon epperson at the nymex. >> definitely. that's what where the safe haven bid is. gold prices up 1700 an ounce. we got as high as 1610 an ounce. they say that is the number gold needs to close above to sustain

any upward momentum here. we're still looking at $11 gain or so in the gold price. we're also keeping an eye on what's happening in other metals because copper, it's a far different story. copper continues to be one of the worst performing commodities of the day, considering what has happened to the dollar. that's a major factor there. we're already seeing concerns there in terms of short positions in the marketplace as well. according to the latest cfpc report. also watching natural gas because it's been a strong out-performer for the better part of the week. it continues to be a gainer but off of the highs of the session. there are some saying that now is the time to take profits in natural gas after this tremendous upturn we have seen in that commodity just in the last week. it's up about 30 cents or so just in one week's time. cold weather, bullish report. part of why we've seen that kind of reaction in natural gas. back to you. >> thank you, sharon epperson. we're expecting from the white house, you see there a live shot of the white house. president obama is expected to

take that podium in just a few moments' time to nominate thomas perez for labor secretary. assista assistant attorney general for the civil rights. we will bring you that press conference as soon as it does happen. but again, another announcement of a nominee to his cabinet from the white house. >> maintaining a hispanic is very important point in the cabinet. let's check on the market in chicago. rick santelli is with the "santelli exchange." >> thanks, simon. i would like to welcome our guest. i'm really glad zach is my guest today because i think he's one of the most sensible, everybody keeled people on our air. >> thank you, rick. >> okay, now, i read your notion of how we should approach the news of the weekend and indeed today regarding cyprus. i would like you to share that with the viewers and listeners. >> yeah, i mean, this definitely is one of these moments of mind-boggling market excuses for

what looks to be like a pretty modest sell-off. i mean, this has been talked about a lot this morning but i'm going to repeat. . one half% of the entire eu gdp. cyprus approaches the earnings of apple so we really are in the realm of psychology. unless you believe this is press sent setting and somehow you're going tv an entire eu that is going to start to tax depositors throughout spain, italy, and elsewhere, there's zero indication of. speculation is rampant but reality is what it is. you are really left with one of these, you know, if this were a small african nation nobody walk talking about this and i'm not sure there should be for this, eith either. >> the markets agree with you. i want to divert the conversation to a more behavioral issue. and that is, all the e-mails i've been getting that when you bend the rules in a crisis you create a huge amount of

uncertainty if not direct mistrust in politicians in central banks. >> sure you do. >> right. but let me stop a minute. do you think that, you know, when i look at the poll numbers of congress or the debate about the federal reserve in qe, do you not see a huge amount of distrust in this country, as well? >> absolutely. but the problem is as you know you don't get to pick your moment of needed change. and usually as we do know, crisis is, what, forces that change. >> but, zach, on another note, on another note, the rule of law has been one of the backbones of successful financial sororities, especially the u.s., and in many ways differentiates us from europe. >> right. >> european politicians have already carved out the notion that they can affect your lives in ways that many people left europe to come to the u.s. to avoid. can you not at least see that what's going on, whether it's the fed in quantitate tive

easing, whether it's the notion that gm wasn't a normal bankruptcy or picking winners and losers in things like se is a len dra and solar. aren't we going down the road even though this is just a little mouse that died, but isn't the big issue here the fact that our leaders are really no different? >> okay, so two things here. one, you've absolutely put your finger on why it is that this relatively globally insignificant for the sip cypri not globally. on the second part, i don't agree with your characterization. you've arctticulated what that concern is. i do think a crisis we all have to accept that the rule of law is always malleable. we remake and reform and question calibrate laws depe depending on changed circumstances. anyone who thinks that law is a static thing that never changes is placing false certainty on a reality that is fluid. >> our time is out. >> okay.

>> i'm glad you were here this morning to show the other side but at the end of the day i think you're cut out to be a supreme court justice because in my world you don't bend on principle and you don't bend on the constitution and you absolutely should never bend on the rule of law. we're all entitled to our opinions. >> thank you. >> simon, back to you. >> thank you very much, rick santelli, live in chicago. coming up next, the first weekend of joe fresh at jcpenney stores are in the book. are these early finds of more positive news from jcp. later on, find out how simple could be better than your bank than almost everything. a bank startup is here to tell us why his company is the answer to everything we might hate about the big bank.

coming up on the "halftime report," bold city our traders on whether cyprus is a game changer for investors. morgan stanleystanley katie hub here. and morgan stanley, a big loser but is it a buy on the pullback. >> busy day for mcc. waiting for the president to speak in a few minutes. he's expected to attempt another second term cabinet vacancy,

he's from the justice department for 3 1/2 years. important work ahead, of course. con ttroversial work with the minimum wage and immigration laws. we'll come back to that as soon as the president appears. this isn't a sight you see too many days. jcpenney is up. on friday they launched the joe fresh brand at its stores. some analysts say this is bron johnson's last push. one coming out and saying renting out retail space or creating a model is from the solution. dana is joining us. >> thank you for having me. >> let's address joe fresh. if this is his last push, not a bad one, you say. >> i was in the stores, my team was in the stores. we only had color, definitely had an impact. it helps to drive some levels of traffic in terms of what we've seen but it's a small part of the store. you need the whole store to get the lift in order to drive the

business. >> in terms of bringing in enough traffic into joe fresh and consumers will walk around presumably and go to other st e stores within the store, you didn't say that translate into ancillary, sells, did you? >> yes, we saw lots of signage, which definitely promoted the joe fresh brand. you saw salespeople who were educated and knowledgeable about what joe fresh is. you did see a bit more traffic this weekend than what you saw last weekend. but there's a lot more of this that's needed. >> in terms of this other note, and i hate to ask you about a competitor's research, but do you think that within the realm of possibility for jcpenney to examine the possibility of adopting a structure where it takes a certain percentage and leases that out to other retailers? >> we've seen concession models before where retailers lease out space. we do think that works in some instances. but it has to be shops and manufacturers that all cater to a similar customer. you've got to get the brand

identity back. >> i mean, when i first read this note from isi by first thought is who would lease out space within a jcpenney. can you think of any brands off the top of your head that would go that route? >> one of the things we've seen is we've seen johnson go out to different vendors to lease space. until you can prove that you're a driver of traffic, then in essence you want your brand to be -- >> sorry to interrupt. straight to the white house where president obama is making an announcement, expected to nominate the next cabinet secretary. straight to the press room. >> thank you. everybody have a seat. have a seat. as i've said before, my top priority as president is doing everything we need to do to make sure that we're growing our economy and that we're

strengthening our middle class. as i said in my state of the union address last month, every day we should be asking ourselves three questions. one, how do we make sure america is a magnet for good jobs. number two, how do we equip people with the skills they need to get those jobs? and number three, how do we make sure that hard work actually pays off in a decent living? these are the challenges that i've been instructed my team here at the white house and in my entire cabinet to focus on. and a position that's instrumental to tackling these challenges is having an outstanding secretary of labor. so i want to begin by thanking hilda solice and her entire team. including acting secretary seth

harris. for the outstanding work they've been doing over the past four years. their efforts at the department of labor have given more young people a chance to learn new skills, more returning vets the chance to find a job. they've looked out for safety at construction sites, coal mines. they stood up for workers rights to organize, women's rights to get paid equally for the work that they do. they've done an extraordinary job fighting on behalf of working families across the board. and today i'm proud to nominate a leader to carry on those efforts as america's next secretary of labor, tom perez.

like so many americans, tom knows what it's like to climb the ladder of opportunity. s he's the son of dominican immigrants. he helped pay his way through college as a garbage collector and working at and working at a warehouse. he went on to become the first lawyer in his family. his story reminds us of this country's promise, if you're willing to work hard, it doesn't matter who you are, where you come from, what your last name is, you can make it if you try. tom's made protecting that promise for everybody because of his life. as a civil rights attorney, aide to senator ted kennedy, member of the montgomery maryland town council, tom fought for a level playing field where working families can get ahead. this is not the first time he's chosen to be labor secretary either. we've got here today governor martin o'malley. martin appointed tom as

secretary of maryland's department of labor, where he helped implement the country's first statewide living wage law because he understood a minimum wage should be a wage you can live on. in his current roll as head of the u.s. justice civil rights division, tom has opened pathwayings for everyone willing to contribute, including americans with disabilities, g lbgt and immigrants and helped settle some of the largest cases by unfair mortgage lending. while he's tackled plenty of tough issues, tom has spent a career as census builder, worked with ceos, labor leaders, federal, state and local government levels and throughout, he understands our economy works best when the middle class and those working to get into the middle class have security they need on the

job and democratic workplace and everybody playing by the same set of rules. tom's knowledge and experience will make him an outstanding secretary of labor. there's plenty of work to do. we will have to work very hard to make sure that folks find jobs with good wages and good benefits. we have to make sure our veterans returning home from iraq and afghanistan have a chance to put their incredible skills and lrn to work at home. we need to build an immigration system that works for every employee and family and business. i'm confident tom can work to promote economic growth but also make sure that that growth is broad-based and is an integral part of our economic team. these are just a few of the challenges working families out there facing and where they need an advocate. tom is he right person for that job. i hope the senate will act swiftly to confirm tom so we can work together to address all

these concerns. i want to thank not only tom but his wonderful family for agreeing to take on this new role. i just heard tom has been coaching basketball and baseball he doesn't claim to be a great coach but he brings passion to it. he may end up missing a few of the games over the next several months, but it's going to be for a good cause. i appreciate his family being willing to make these sacrifices as well. >> so the president of the united states saying thomas perez should be the next labor secretary to replace the departing hilda solis. let's bring in our own john harwood for reaction. thomas perez is not without controversy and i wonder how it will go down in the senate. we had a report from the justice department saying he gave incomplete testimony himself whether the department's political leadership was involved in a decision to

dismiss three of the four defendants in a lawsuit the bush administration brought against the new black panther party. will the republicans run with that? will they be in opposition to his nomination? >> they'll run with it to some degree. that black panther case doesn't amount to much. there are other controversies as well, aggression sill proponent of voting rights and there was an article criticizing the way he criticized interpretation of disparate impact of federal policies on minorities compared to other americans. tom perez is a liberal no question about it. the president is determined to have people who both ideologically as well as demographically and ethnically reflect his coalition and his approach to governance. i do expect tom perez used to work for ted kennedy and used to be a local official here in this washington d.c. area as

montgomery council member and will get flak from republicans and ultimately to be confirmed. >> and strong support from the labor unions and hispanic groups. john harwood from washington. would you want to get rid of your bank? there's an app for that. simple. a bank without the banking, no checks, no fees, no deposit certificates. how does it work? the co-founder and ceo joins us here next on cnbc. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."

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